Do Green Subsidies Work?

I read with interest a recent article from MLive.com on Evergreen Solar. It is closing a solar panel manufacturing plant in Massachusetts and moving the jobs to China. It was in MLive because the company got subsides from the state of Michigan to open a similar plant in Midland. This is another example of the reality of green jobs being far different than the rhetoric.

I wrote previously that green manufacturing jobs are not high paying. Nor are they immune from off shoring as Evergreen Solar demonstrates. High paid jobs that can’t be off shored are a major component of the pitch by advocates for states like Michigan to provide special subsidies for green technology, particularly alternative energy. The subsidies probably make sense as environmental policy, but they don’t as economic development policy designed to bring high wage factory jobs back to Michigan. The same economic realities – driven by globalization and technology – that are lowering the wages of factory workers and reducing the amount of that work done in America and Michigan apply equally to green and non green factory jobs.

Harvard’s Edward Glaeser, in a must read New York Times blog, delineates the lessons we should learn from Evergreen Solar. He writes:

As long as solar panels are getting cheaper, we shouldn’t worry about where they are being produced. We should continue financing research on solar technology as long as that research continues to produce cost-cutting breakthroughs, like “string ribbon” technology, but we shouldn’t pretend that cheaper solar energy will end up employing millions of our less-skilled citizens. For decades, local economic success has come from entrepreneurship and education, not large-scale manufacturing. The Devens closing doesn’t imply that there is anything wrong with clean energy, but it does suggest the difficulties inherent in trying to beat China at cheap manufacturing. In the long run, America will be richer than China only by having smarter citizens, and that requires the skills that come from schools and cities, not dispersed factories.

When will we learn Glaeser’s lessons? That it is human capital – education attainment – concentrated in big metros anchored by vibrant central cities that are what matters most to economic success today and even more so tomorrow. Those are the foundations on which to rebuild a prosperous Michigan.

Lou Glazer is President and co-founder of Michigan Future, Inc., a non-partisan, non-profit organization. Michigan Future’s mission is to be a source of new ideas on how Michigan can succeed as a world class community in a knowledge-driven economy. Its work is funded by Michigan foundations.